The Fed has kept its benchmark lending rate in a range of 5% to 5.25%. However, the US central bank's forecasts of further increases in borrowing costs to around 0.5% later this year have sent markets into turmoil.
Speaking at a press conference after the US central bank’s latest policy meeting on June 14, Fed Chairman Jerome Powell said that US growth and the job market are holding up better than expected under the weight of the aggressive tightening of monetary policy over the past year. This may prolong the Fed’s fight against inflation, but also bring less economic damage.
Powell said the pause was a prudent move to allow the Fed to gather more information before deciding whether rates need to be raised again. The pace of the move is less important now than finding an appropriate endpoint that slows the pace of price increases and keeps unemployment at a minimum.
The committee's next meeting in July will still be an "in-person" meeting, and the Fed has not made any decisions regarding interest rates at that time, Mr. Powell said.
US Federal Reserve Chairman Jerome Powell speaks during a press conference following the Federal Open Market Committee (FOMC) meeting on June 14. Photo: CNN
Eighteen members of the Federal Open Market Committee (FOMC) gave their expectations for interest rates in 2023. Four members said they expected another rate hike, nine said they expected two, two said they expected three, and one said they expected four. Only two members said they expected no more hikes this year.
US stocks were mixed after the Fed's decision. The S&P 500 closed little changed, while the Dow Jones Industrial Average fell 0.8%, or 250 points. The tech-heavy Nasdaq Composite also rebounded from its lows to gain 0.2%.
US benchmark West Texas Intermediate (WTI) crude fell 0.99% to $68.62 a barrel. International benchmark Brent crude fell 1.61% to $72.32 a barrel. Earlier, WTI and Brent both rose on optimistic expectations for oil demand.
However, the gains were reversed after US stockpiles rose by 7.92 million barrels, and inventories at the main storage hub in Cushing, Oklahoma, rose to their highest level since 2021. Many Wall Street banks have cut their oil price estimates, mainly due to the increase in supply outpacing demand.
Crude oil prices have been largely range-bound since early May, as ample Russian supplies and concerns about global demand countered production cuts by OPEC+, led by Saudi Arabia.
JPMorgan Bank on June 14 cut its forecast for the average Brent crude oil price this year to $81/barrel (down $9/barrel), saying that OPEC+'s actions would unbalance the market.
Gold prices fell 0.1% to $1,960 an ounce.
The yield on the 10-year Treasury note fell four basis points to 3.80%.
Bitcoin fell 0.2% to $25,828/BTC .
Nguyen Tuyet (According to Reuters, Bloomberg, CNBC)
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